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What criteria should I use when choosing a project?
Project selection made easy
Most companies have many improvements they could make and hence there is no shortage of potential projects. But how do projects actually get selected? Are these 'flavour of the month', the bosses pet project or whoever shouts the loudest?
Projects often select themselves out of 'necessity'. This happens when something unexpected goes wrong and is usually an urgent business issue such as a customer complaint, a broken machine or any number of 'emergencies'. Once the issue has been overcome, then everyone loses interest.. until the next time the problem reoccurs.
So how should we select projects, to prevent this happening?
Companies that do not plan and manage their improvement projects but which are run on a knee jerk basis tend to get into a downward spiral. (See figure 1).
Fig 1. The fire fighting downward spiral
The company has many problems; it has no time for planned improvements and therefore focuses on the short term. Consequently there is little time to spend on improvements, the root causes of problems are not fixed and more problems occur, creating a downward spiral.
On the other hand companies who plan and manage their improvement projects tend to have fewer problems, have time to fix the problems they do have which allows them to concentrate on the future and make further improvements (see figure 2).
Fig 2. The continuous improvement upward spiral
For continuous improvement to really work in an organisation, the selection of projects should use 3 simple criteria:
- Is the project strategically aligned
- Will the result add value
- Is it feasible
Strategic alignment
Projects should be selected to progress your company along a strategically chosen direction. In turn, strategy must be linked to customer and stake holder needs. A correct strategy deployment is far more than an annual budgeting round. By using a strategic alignment tool such as Policy Deployment or Balanced Score Card you will help to ensure that your organisation is strategically aligned. This will also ensure that breakthrough and continuous improvement projects are planned with a clear purpose and ordered to give maximum benefit.
Projects within a strategically aligned plan can be focussed on key business blockages or improvement areas such as growth or maintaining competitive advantage. Also projects can be grouped into powerful clusters in order to make step change improvements.
Projects run and managed within a carefully deployed strategy are better understood by the organisation, advance the company along the chosen path creating purpose and direction and staff motivation.
Adding Value
Adding value can be to the customer, the organisation or the wider community. W Edwards Deming, the improvement guru, once said “If you have a broken process and don't fix it, you pay for it anyway.” This means that a broken process will be creating defects or poor service.
The organisation is then paying for the cost or poor quality including the unseen costs of customer loyalty, loss of business etc... Also when a broken process lets you down 'big time' you have to fix it urgently anyway. It is better to fix the process in a planned and organised way as opposed to as a knee jerk reaction when it all goes wrong.
Projects should be aligned to the purpose of the business. The value of a project should be seen in a holistic sense taking into account the whole business. Too often projects are aligned to local or departmental goals which do not benefit the organisation as a whole. Using a measure such as Economic Value Added (EVA) enables organisations to capture the total value of a project and compare projects in different parts of the organisation using a single metric.
The financial benefit of a project can be many fold, including improved quality, greater efficiency, reduced working capital, higher productivity, improved lead times and improved service which often lead directly to increased revenues and reduced costs. Using EVA allows a range of projects to be prioritised in value order.
Ensuring that projects add value is essential in order to advance the business.
Feasibility
Many organisations embark on projects without really knowing whether they have the capability or resources to run the project and without considering what risks are involved. As part of the project selection process a check must be in place to help ensure that projects are feasible.
This need not be an expensive or time consuming exercise but must be a rational and honest assessment of the probability of success of each of potential project.
The elements that are included in a feasibility study will vary dependent on the type of project being considered, what type of organisation is involved and several other factors. A typical list however may look like the following:
- Technical skills available
- Project management/leadership skills available
- Team availability
- Delivery time scales
- Resources required
- Stakeholder support, cultural acceptance, project scoping and objectives
- Risk assessment
Before embarking on a project, ensure that the team has the technical competences to solve the problem and actually make the improvements. Research has shown that knowing the correct tool to apply and how to apply that tool correctly has a large impact on the successful outcome of a project.
It goes without saying that leadership skills are important and that the resources needed are available or will be made available to the project team. This also means that processes are made available for data collection and experimentation, further specialist skills are made available to the team and that a budget is available with spending authorities clearly communicated.
Research has also shown that support from management is key to the success of a project. Managers must understand the strategic nature of the project and its objectives and must not hijack it for their own aims.
Clearly defining the objectives of a project and scoping it up front is another important issue for project success.
As part of the feasibility study include a risk analysis of your project. The tools for this may include matrix style risk assessment or a more rigorous FMEA. A risk assessment should provide a quantifiable risk to the project and thus provide the basis to determine the probability of success.
Probability of success can be split into technical and commercial probabilities and then fed back through the economic value added model to provide a list of the projects with the highest likely return.
The 3 most important questions to ask when selecting a project are; 1) Is the project strategically aligned, 2) is it valuable to the organisation and 3) is it feasible?
These questions are interrelated and have a number of components each. However, if you can answer yes to each of these questions then each of your projects and your overall improvement journey will be radically improved.
If you want to know more about Lean Six Sigma, DMAIC, DMADV or the host of other powerful tools for project selection and management contact SigmaPro to find out about our comprehensive training and support programmes.
Author Bigraphy
David Cowburn - Master Black Belt Lean Six Sigma
David has 25 years of running companies to Managing Director level and is experienced in utilising Lean Six Sigma in a wide variety of businesses including, manufacturing, process industry, service, and administrative.
In a people based hands-on style, he works and trains at all levels in an organisation from Board to shop floor to bring about rapid measurable step changes in performance.
David was originally trained in the Toyota Production System and has since developed a high level blend of Lean and Six Sigma philosophies and tools through working with businesses all around the World.
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